Debt Repurchase With an FX Goal

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Debt Repurchase With an FX Goal

Third week
January 2023

The government announced last week that it would buy back USD 1 billion of dollar-denominated sovereign debt, potentially reducing the stock by about 3 billion given prevailing market prices. The measure was "sold" as a yield curve improvement, but that appears to be a questionable objective in the current circumstances. In our opinion, the true objective is the (market) exchange rate.